Survival is a Digital Game for Planners

When it comes to technology, the wealth management industry is currently inhabited by two kinds of creatures: dinosaurs and fleet-footed mammals.

The dinosaurs are old school. Most of them have been in the planning business for a long time, have established books of business and rely heavily on an older clientele who are either near or already in retirement. On the bell-shaped information technology curve, these folks are among laggards. They make some use of IT, but they adopted it in a slow and lumbering manner.

The mammals are a different breed. Frequently younger and more dependent on next-gen clients, they can be characterized as innovators or early adopters on the IT curve, and are building tech-centric practices.

These disparities are reflected in our new Tech Survey (see p.46 for complete results). There we find that, up from prior years, 92% of planners now make use of some sort of CRM software. Yet among the more sophisticated Redtail and Salesforce users, more than 20% of these advisors list their primary CRM application as Microsoft Outlook. Really??! OK, technically, Outlook can be classified as CRM. But that’s like saying you finally turned in your horse and buggy for a car — only you bought the kind that still requires a hand crank to get it started.

Here’s another example: Of the 600 advisors who took our survey, 20% still don’t use any financial planning software. Among older advisors, ages 65 to 74, the number is even higher: nearly 37%.

In contrast, over 39% of our 25-to 34-year-old survey takers say they’ve gotten a greater ROI from their financial planning application than from any other technology. These younger advisors are using the software to automate that portion of their services that has become commoditized. This frees them to compete with the robos by focusing on services that add real value for their clients.

The differences among the age groups are even more extreme when it comes to social media: Nearly half of advisors ages 55 to 64 never use social media at all; 100% of respondents ages 24 and under do use it, and half of them use it multiple times a day.

A recent study by Fidelity Investments labeled these younger, tech-savvy advisors eAdvisors, and found that, as a group, they have nearly 40% higher AUM, serve 55% more clients and are more satisfied with their careers than their less tech-savvy counterparts.

For now, the dinos heavily outnumber the mammals and are sitting on most of the assets managed by the industry. But pay heed — the climate has turned against them, and the mammals will soon be stealing those nest eggs.